Public companies in Brazil will be required to provide annual information on sustainability and climate starting in 2026, according to a new announcement from Brazil’s Securities and Exchange Commission (CVM) and the Ministry of Finance.
According to the CVM, the new reporting requirements will be based on the recently published standards for sustainability and climate-related disclosure issued by the IFRS Foundation’s International Sustainability Standards Board (ISSB). The ISSB was launched in November 2021 at the COP26 climate conference, with the aim of developing IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements that provide a consistent understanding of the impact of sustainability risks and opportunities on companies’ prospects.
Brazil is the latest in a series of jurisdictions to announce the introduction of the new standards, with recent announcements by Britain and Australia. In July, IOSCO, the leading international policy forum and standard setter for securities regulators, called on regulators to incorporate the standards into their regulatory frameworks for sustainability reporting.
Following the CVM announcement, ISSB Chairman Emmanuel Faber said:
“We continue to hear strong support for the ISSB standards from regulators worldwide and I commend Brazil’s Ministry of Finance and Comissão de Valores Mobiliários for providing clarity to companies and investors in Brazil by setting out a clear roadmap to mandatory adoption.”
The new reporting requirements for part of Brazil’s Ecological Transformation Plan, the country’s strategy launched earlier this year, aimed to boost the transition to a green economy, which also includes $350 billion in planned public and private infrastructure investments .
According to the CVM, listed companies and investment funds will be able to voluntarily start sustainability reporting according to IFRS standards in 2024, while mandatory reporting for listed companies will start in 2026. From 2027, sustainability reporting will be mandatory within three months. after the end of the financial year, or simultaneously with the publication of the annual accounts, whichever comes first.
The CVM added that the new reporting requirements will help global investors assess risks and opportunities, reduce information costs and optimize capital allocation, and enable decisions aligned with sustainable and responsible values.
Brazilian Finance Minister Fernando Haddad said:
“This will generate a virtuous cycle of greater transparency and engagement, creating the opportunity to measure the problem, because a global institutional benchmark is needed so that the market is global.”